Business News

Government approves final draft of state financial statement

The government approved the final draft of the state financial statement this week. According to the statement, the national budget posted a 142.8 billion crown deficit in 2011. The original plan anticipated a 135 billion budget deficit, the difference being put down to problems with drawing subsidies from European funds. The Czech Republic's public finance deficit dropped to 3.1% of the gross domestic product last year, 0.6 points less than the government projection of 3.7%. Nonetheless, Prime Minister Nečas noted that this was no reason to rejoice, saying the public finance deficit was better because of decreased investment activity on the part of municipalities and universities. He added that it was clear that efforts aimed at fiscal austerity must continue.

Problems with EU funding could increase state budget by nearly 33 billion

Photo: European Commission The aforementioned problems with drawing money from EU funds could increase expenditures in the state budget by up to 32.6 billion crowns. An analysis from the Regional Development Ministry taken up by the government this week showed that roughly 17 billion crowns worth of expenditures cannot be covered from the EU because of irregularities – i.e. grants that the state may have to cover because they are suspected of having been paid out improperly. More than 61 million in improper grants have been ruled out by the EC already. The rest of the amount consists of expenditures that the country will not ask the EU to cover in the end – projects such as transportation work that went over budget due to overtime, for example.

Finance Ministry to issue household bonds pegged to inflation rate

Miroslav Kalousek, photo: CTK The Finance Ministry intends to issue new bonds for households with interest rates pegged to the rate of inflation. The bonds, worth 10 to 20 billion, will be issued in June and will have maturities of seven to eight years. Finance Minister Miroslav Kalousek said this week that he wanted to offer the middle class protection from inflation. The bonds will not bring any yield, but will be the only product with which the state guarantees that savings will not be devaluated. According to the ministry’s latest forecast, the average inflation rate should reach 3.3% this year and 2.3% next year. Last autumn the ministry tested household bonds worth 10 billion which have proved immensely popular.

Czech arms manufacturers can compete for US tenders

Czech arms manufacturers and others serving the defence industry will now be able to compete for tenders in the largest of all such markets – the USA. As per an agreement signed this week by Czech Defence Minister Alexandr Vondra and his American counterpart Leon Panetta Czech entities can now make their bids directly – previously, American legislation required that offers be accepted primarily by US companies, which meant that Czechs and others could only acquire subcontracts. Mr Vondra called the agreement the most important step the country has made in its relations with the US in the last year, noting that of the 20 countries with which the US has signed similar agreements, the Czech Republic and Poland are the only ones from the former Soviet bloc. At the same NATO conference the Czech and American foreign ministers also met to discuss the American company Westinghouse’s bid for the completion of the Temelín nuclear power plant.

Czechs drinking less beer than ever before

Photo: European Commission Though you wouldn’t know it by the packed beer gardens, Czechs are apparently drinking less brew than ever before. According to an analysis from the Czech Statistical Office, while every (statistical) person in the Czech Republic drank a record 164 litres of beer a year in 2005, that amount fell to less than 145 litres in 2010 – a record low. The Czech association of brewers has noted the same trend: their research show that the average weekly consumption of 9.5 mugs (half-litres) among Czech men in 2007 fell to 7.7 last year. That is of course not to say that Czechs are drinking any less. Winemakers are still revelling in a 20-year steady rise in consumption, which peaked in 2010 at 19.4 litres per person per year.